U.S. restaurant performance fell to its lowest level in 14 months

Due in large part to restaurant operators’ dampened outlook for sales growth and the economy, the National Restaurant Association’s (NRA) Restaurant Performance Index (RPI) fell sharply in October. The RPI—a monthly composite index that tracks the health of and outlook for the U.S. restaurant industry—stood at 99.5 in October, down 0.9% from September. In addition, October represented the first time in 14 months that the RPI fell below 100, which signifies contraction in the index of key industry indicators.

“Although restaurant operators overall continued to report positive same-store sales in October, their short-term outlook for sales growth and the economy is decidedly more pessimistic,” said Hudson Riehle, Senior Vice President of the Research and Knowledge Group for the Association. “Nearly two out of five restaurant operators expect business conditions to worsen in the next six months, which is double the proportion that expect conditions to improve.”

While sales remained positive overall, restaurant operators reported a net decline in customer traffic levels in October. Thirty percent of restaurant operators reported higher customer traffic levels between October 2011 and October 2012, down from 36% who reported positive traffic in September. In comparison, 41% of operators reported lower customer traffic levels in October, unchanged from September.

Restaurant operators’ outlook for sales growth deteriorated significantly in recent months. In fact, 31% of restaurant operators expect to have higher sales in six months (compared to the same period in the previous year), down from 45% last month and the lowest level in three years. Meanwhile, 21% of restaurant operators expect their sales volume in six months to be lower than it was during the same period in the previous year, up from 11% last month.